L Brands To Sell Victoria's Secret At $1.1B Valuation

Editor's note: this story has been updated to correct the headline to state that the proposed sale of Victoria's Secret valued the brand at $1.1 billion. 

L Brands Inc. LB is close to selling Victoria’s Secret to a private-equity company. The lingerie maker will operate as a private business post-sale.

What Happened

The Wall Street Journal, citing sources, revealed that a deal between Sycamore Partners and L Brands is very close to being completed. Sycamore Partners would buy 55% of Victoria’s Secret, while L Brands’ operations would be limited to running Bath & Body Works.

Leslie Wexner, the CEO and Chairman of L Brands, is reported to step down from both roles. Wexner owns 17% of L Brands' shares and will remain on the board of L Brands. A deal is expected to be signed between the companies on Thursday.

Why It Matters

Victoria’s Secret has suffered from decreasing sales due to Wexner’s connections with Jeffrey Epstein.

Even so, Sycamore is getting a company that generated nearly $7.5 billion in sales in 2019.

The sale of Victoria’s Secret could “unlock significant value,” according to MarketWatch. The publication quoted Jefferies analysts who observed the dependency of L Brands' businesses on shopping malls. 

The analysts noted the "structural decline in mall traffic” and warned, “As such we believe Victoria’s Secret and Bath & Body Works are challenged in an increasingly e-commerce world.” They added, “We see hundreds of store closures in the future as the company seeks to stem losses, which are unlikely to be offset by gains online.”

Price Action

L Brands shares closed the regular session higher by 2.12% at $24.60 on Wednesday. The shares remained unchanged at $24.60 in the after-hours session. 

Photo Credit: Public domain photo via Wikimedia.